Homestead Exemption Question

[demismom]

We have a house that WAS our home for 16 years. Stupidly bought a larger (not by alot though) house before selling the first, so we were forced to rent it out. We're giving the rental back to the mortgage company, we've already abandoned it to them, per our Attorney's advice.

My question then is this: Since we don't technically own the home we're living in, there is a legal land contract on file, do we have to use the Homestead Exemption on the land contract home or can we use unused Homestead Exemption (from our rental) to protect personal property?

Our attorney felt that we don't REALLY have any interest in our land contract home, we can be evicted if we don't make payments, but I'm not so sure I agree with that. We currently owe 73,000 on the owner's mortgage (we're making the payments for them) and the house is worth about 90,000. Thanx!

[demismom]

Maybe I worded this wrong. Do we even GET an exemption to use since the rental is going back and we don't own the house we're living in except we have a land contract?

I'm thinking we don't get any because we don't home our primary residence, is that correct? We're using Federal exemptions, Michigan's aren't that good. TIA!

[SamanthaJones]

You have a vested interest in your house-

It's your primary residence, and you pay the mortgage, why would it not be legally your homestead? The rental can't be used as any exemption, and not only that you already gave it back. Shame on michigan tho- for it's crappy homestead exemption, considering the housing market there and the bleak gloomy outlook....

[demismom]

Hi Sam! Long time no talk to. I had been told by one attorney that since we have a land contract, we're essentially glorified renters and that the Trustee won't really look to the house for any equity, but by the same token, I started wondering if that meant we don't get a homestead exemption then since we're giving BACK the rental and don't technically "own" our primary residence.

[wrinkleigh]

I dont think you can claim homestead on either of these properties.

You own the rental -- but it is not your primary residence ** and** it is going back.

The second is your primary residence -- but you dont **own** it -- therefore your can't claim homestead on it either, basically you are a renter.

Maybe some others who are more knowledgable will chime in, this is just my understanding.

[demismom]

wrink - that's what I was afraid of. Shoot, I hope someone has some experience. I think I'm going to call my lawyer's office just so I know one way or another because now it's going to bug me.

[demismom]

I just got off the phone with our attorney's office staff (legalhelpers.com) we were on for quite some time, nearly 30 minutes while he researched and talked with colleagues and they all came to the same conclusion. Because our Land Contract is written as purchasing instead of leasing we get to use the Homestead Exemption! We have $27,000 equity (roughly) in the house, we get to claim 36,000, so that means we have $9,000 leftover to use on other items. I sure hope he's right. He said it's a definite gray area, but they all feel our equity is safe.

[SamanthaJones]

THAT is hot news, demismom-

Makes me want to go to Chelsea, and toast to you with a cosmo? Really- a purchase contract, a mortgage, a purchase offer, or whatnot- the intent is clearly to have a homestead for yourself, no? And at the least even renters can homestead their deposit. I'm glad you alreaday have equity- the way the economy is turning. The bet thing I've heard today is about the second mortgage maybe being unsecured and dischargeable (see my post in general bankruptcy news, today). Now THAT....well, that is what ROCKS my world~

[SinkingFast]

Makes me want to go to Chelsea, and toast to you with a cosmo? Really- a purchase contract, a mortgage, a purchase offer, or whatnot- the intent is clearly to have a homestead for yourself, no? And at the least even renters can homestead their deposit. I'm glad you alreaday have equity- the way the economy is turning. The bet thing I've heard today is about the second mortgage maybe being unsecured and dischargeable (see my post in general bankruptcy news, today). Now THAT....well, that is what ROCKS my world~

No, we didn't get to "Homestead" our Security Deposit.

Our Security Deposit was Exempted under a State Statute for "Security Deposits to Utilities, Landlords, and Others".

The Homestead Exemption is an entirely different Statute Code than the Code used to Exempt our Security Deposit.

[jal1129]

I did'nt get to homestead my security deposit either.

[demismom]

Samantha - yep, that's what they indicated to me, the intent is to PURCHASE the home, not simply live in it, so we get to use the Homestead Exemption. Yippee! As for a Security Deposit for a renter, I wouldn't think so, but there is a wildcard of $975 (Federal, I believe) that can be used for a security deposit. Hey, have a Cosmo for me too, my sister LOVES those things, they're okay, I'm a wine kinda gal myself.